The FTSE 100 index of blue-chip shares has jumped by 91 points, or 1.25%, to 7,462 points as it continues to rebound from Monday’s 2.6% tumble. British Airways' parent company, IAG, (+3%), the oil company Shell (+2.3%), the mining group Glencore (+2.5%) and the hotel operators Whitbread (+2.6%) and InterContinental (+2.8%) are among the risers. Central bankers are in the spotlight today, putting investors on edge as they brace for higher interest rates and the withdrawal of monetary stimulus. Anxiety about the prospect of higher US interest rates has been hurting markets in recent weeks. The US Federal Reserve is setting its policy today, and is expected to signal that its hiking cycle will begin in March. With US inflation soaring to 7%, and unemployment back down at 3.9%, the Fed can make a case for tightening. But it faces a communications challenge to spooking markets, which have grown used to loose monetary policy, with four rate increases this year now being priced in. Jim Reid, a strategist at Deutsche Bank, says the Fed chair, Jerome Powell, faces “an interesting day of communications”, particularly when outlining how he will approach quantitative tightening. That is the process of running down the Fed’s balance sheet, which has swelled through its bond-buying stimulus programme, which is on track to end in March. The Bank of Canada is also meeting today, and it could possibly raise interest rates – as it tries to pull inflation down from a 30-year high of 4.8%. Trading in overnight swaps markets suggests there is about a 70% chance the Bank of Canada will raise the benchmark interest rate to 0.5% from its emergency low of 0.25%, Bloomberg reports. It has already been a volatile week, particularly on Wall Street, where the Dow Jones industrial average has bounced back from 1,000-point falls twice in a row. The UK’s pandemic pet boom has left Pets at Home celebrating its busiest ever Christmas. Pets at Home, which offers grooming and veterinary services as well as pet supplies, has increased its profit forecasts for this year. It reports record sales of seasonal ranges because of the demand for premium products and "pet humanisation" – where owners treat pets as part of the family. Revenues in the last quarter of 2021 jumped 8.7% year on year. Sales of dog spa days and advent calendars have soared. The agenda • Noon: US weekly mortgage applications • 1.30pm GMT: US goods balance for trade • 3pm GMT: Bank of Canada interest rate decision • 7pm GMT: US Federal Reserve interest rate decision • 7.30pm GMT: Fed chair Jerome Powell’s press conference We’ll be tracking all the main events throughout the day ... |